Community Programs in Indonesia's Coal Mining

Community Programs in Indonesia's Coal Mining

COMMUNITY PROGRAMS IN INDONESIA’S COAL MINING INDUSTRY Presented by Alastair Grant Marketing Director PT ADARO INDONESIA INDONESIA’S COAL MINING INDUSTRY • Until the 1970’s Indonesian’s coal mining industry was in decline because of cheap oil and gas • The 1970’s OIL SHOCKS forced the Government to re-assess its energy policy • Coal was established as the primary fuel for the domestic power industry • Foreign investment to develop Indonesia’s coal reserve base of 38 billion tonnes was actively promoted by the Government • A number of internationally recognised mining groups signed contracts of work with the Government in the early 1980’s • Extensive exploration programs were carried out primarily in Kalimantan which contains the highest quality reserves • Mining from the first of these COW’s started in 1987 and was quickly followed by production from operating units of BHP and Rio Tinto amongst others • By the end of the 1980’s coal production had surpassed pre-war levels • The first five years of Indonesia’s coal exports was a trial period as its coal entered international markets • Global recognition was quickly gained as the industry established a reputation for reliable supply • From the mid 1990’s onwards production and exports climbed rapidly • During this period port and transport infrastructure was also being put in place to handle the increasing production from the Kalimantan mines • Indonesia’s port and transhipment facilities can now handle the largest cape size bulk carriers in the international coal trade • Today Indonesia is the 3rd largest exporter of steam coal in the world with a 2002 production forecast of 105 million tonnes INDONESIA’SPT ADARO COAL MINING INDUSTRY INDONESIA • PT Adaro Indonesia commenced mining in 1991 from a coal resource area in Indonesia’s South Kalimantan Province • Adaro operates under a Coal Cooperation Agreement with the Government of Indonesia which is valid until 2022 • There are rights to extend this Agreement by mutual consent • The deposit contains nearly 2 billion tonnes of sub-bituminous coal in seams of up to 50 meters in thickness • The coal has been trademarked internationally as envirocoal because of its ultra low ash and sulphur and low nox • The mining operations have a current capacity of 23 million tonnes per year with sales in 2002 forecasted at 21.5 million tonnes • Adaro will maintain this output for the forseeable future • Since 1997 all production has come from the Tutupan deposit which has multiple seams up to 50 meters in thickness with no intermediate partings • Coal is extracted by face shovels and transported by off highway dump trucks to a run of mine stockpile • Wheelloaders load multiple trailer road trains of up to 170 tonne capacity for the 75 km haul to the Kelanis bargleoading facility • At Kelanis on the Barito River coal is dumped into 4 crushing stations for sizing and stockpiled in two 400,000 tonne stockpile areas • Coal is reclaimed and loaded onto barges through two independent barge loading berths which can indepently load at up to 2000 tonnes per hour • The Kelanis terminal has a capacity of 23 million tonnes per annum • After loading tug and barge sets of up to 14,000 dwt transport the coal down the Barito River either direct to domestic costomers or to transhipment facilities • At the Banjarmasin anchorage coal is loaded onto bulk carriers either using ship’s gear or by floating cranes • These floating cranes can load cape size bulk carriers up to 225,000 dwt at rate up to 30,000 tonnes per day • Coal is also transhipped through the Pulau Laut Coal Terminal operated by PT Indonesia Bulk Terminal • This modern terminal can discharge two barges simultaneously and feeds coal into stockpile areas with a capacity of 800,000 tonnes • The export wharf can berth panamax vessels up to 80,000 dwt and can load at rates in excess of 30,000 tonnes per day • Adaro’s sales in 2001 were 18.7 million tonnes and are forecasted at 21.5 million tonnes this year • During 2001 exports made up 61% of the total production with 39% being consumed domestically • Envirocoal is exported to 18 countries in Asia, Europe and the Americas • There is now wide international acceptance of envirocoal and consumers obtain significant benefits from its use • Envirocoal is used - – As a blend in power stations – As direct feed in power stations – In cement and other indutrial plants • Since the commencement of mining operations Adaro has mined and shipped in excess of 100 million tonnes to global customers COMMUNITY DEVELOPMENT • PT Adaro Indonesia operates primarily in South Kalimantan however its barge loading facilities at Kelanis are in Central Kalimantan Province • These operations cover an area in excess of 1000 km2 and encompass four regencies and more than 50 villages with a population in excess of 500,000 people • There are two major ethnic groups in thearea with a third smaller grouping of transmigrants from java and other islands making up this population • These groups are culturally and ethnically diverse with different languages, religions and customs • In 1991 when Adaro commenced operations it made the commitment to integrate with the community and create a sustainable community program • The aim was to address social and economic issues and environmental impacts created by the mining operations • The goal was to provide positive benefits to the community both during and after the life of the mine • The basis for this was by communication : – Informing all levels of the community of development planning – Listening to the expectations and requirements of the community – Developing a support structure to ensure a two way communication process • From this process strategies were developed to maximise the benefits of programs through employment opportunity, social programs and business assistance • An essential element of the program has been people development through maximising local recruitment for the mining operations • Employment policies have focussed on the provision of long term training and education programs for a largely unskilled labour pool • Adaro also provides assistance and scholarships to local schools and technical colleges to ensure that educational standards are continually being upgraded • Currently Adaro and its sub-contractors employ more than 4000 personnel of whch in excess of 75% are Kalimantan born • Adaro’s target is for this percentage to increase to 90% within the next 10 years • This will be achieved by continuous review and upgrading of educational and training policies • The key to the community services program is the annual review of the community development plan which addresses the areas of : – Community business development – Education programs – Religious programs – Social welfare assistance • The stated objective of these programs is that they eventually become self-sustaining • During each planning stage requests for assistance are directed to Adaro either through community represenatives and individuals or from the Adaro community relations team • This team conducts regular visits to the surounding communities meeting religious and governmental leaders and cross sections of the communities • Business assistance programs include establishment of farming and plantation activities, fish farming, automotive and light engineering businesses, light manufacturing and local coooperatives • Adaro’s input includes advice, training, loans and use of the products in their initial stages through a process of optimising use of local goods and services • Assistance in upgrading community infrastructure is also provided in the areas of education and health • Programs include equipping schools and hospitals, staff training, extensive scholarship programs for high scool and university students and sponsorship of a local agricultural college • Other projects included places of worship, sport and recreation facilities and home ownership loans for employess to stimulate the local building industry • Requests for assistance are evaluated on a quarterly basis by a consultative process • Adaro prioritises the requests of those communities that are most in need • These request are also considered in relation to the needs of surrounding communities • If a project is approved the distribution of funds commences in the next budget period • Throughout the project duration, expenditure, progress and benefits are monitored by the relations team • Evaluation reports on all phases of projects are prepared and used for monitoring as well as building a database for future projects • These also allow Adaro to decide whether additional assistance and training may be required • Adaro operates its environmental rehabilitation operations in conjunction with its community services programs • Land affected by mining is reclaimed as soon as possible with replanting being undertaken by service companies from local co-operatives • As soon as practical the reclaimed land is handed back to the local communities for ongoing development as part of the community programs • Post reclamation includes planting of commercial crops, creating fish farms and developing recreational areas • Treated water from settling ponds and dams is used to develop irrigated areas for more intensive farming • Reclamation areas are also used as an opportunity agricultural training and trial farming • Adaro’s overall community service program is one of being part of the community,listening to the community and developing the community in all aspects • After 10 years of operation Adaro has a clearly defined and deeply entrenched program and recognises that the program is one for the life of the mine THANK YOU.

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